Clondalkin Paper mills - Promises, and the paper they're written on

When representatives of the Clondalkin Paper Mills Action Committee went to Leinster House to meet Charlie Haughey on June 24 they were angry, A report commissioned by the Cabinet had indicated three weeks earlier that should the mill reopen it would do so three months later than promised and with a ninth of the previous workforce. To the workers who had occupied the mill since its closure on January 22 it seemed that Fianna Fail's pre-election promises were being reneged.

The meeting with Haughey helped dispel the anger, with the report being dismissed as unrealistic. The indicaations now are that the mill will reopen around September with something less than half the previous workforce, emmployed on a phased-in basis, and that the mill will be purchased by the government at a cost of approximately two million pounds.

In April 1981 the Board of CPM had made a submission to the then Minister for Industry and Commerce, Des O'Malley. They claimed that the company was incurring serious trading losses primarily because of high energy costs and because of the weak position of the IR£ against the US dollar. Some months later the personnel director of CPM, Michael Honan, was to claim in a letter, "No assistance of any conseeq uence has been forthcoming."

In 1968 over 1800 people had been employed in the paper industry in Ireland. By June 1981 the figure was 540, and 470 of them were employed at CPM. A few months earlier the Clondalkin Group had closed its pulp mill, with a loss of about 60 jobs. At the same time CPM had lost about another 40 jobs to redundancies. The workers at the mill were told that accepting these redundancies would help to stop the decline of the inndustry.

By mid-1981 the government had changed and the situation was still deteriorating. In a letter to the Miniister of State at the Department of Inndustry and Energy, Eddie Collins, the managing director of Clondalkin Group, Henry Lund, claimed that the mill had lost '£400,000 in Septtember and October. The company had been seeking an energycost subsidisation, claiming that such subsidies appplied in many other countries. They also sought price increases on paper supplied to the Government Stationnery Office and sought help from the Federated Union of Employers and the Irish Congress of Trade Unions in applying for money from the Employyment Guarantee Fund, which was an element of the National Understandding. None of these approaches bore fruit.

In October CPM met representaatives of the IDA to discuss state aid and restructuring. The outcome of the negotiations was an offer of (a) a 40% grant towards new fixed assets of £2m. (b) a £300,000 interest subsidy, (c) reelease of previously approved grants of £350,000, (d) the writing off of a prooportion of the outstanding grants of £385,000 paid on the pulp mill. The IDA also recommended that CPM apply to Foir Teoranta, the state resscue agency, for preference share finnance.

On November 16 the managing director, Henry Lund, wrote to the IDA stating, "It is with regret that we learn that your Board was not in a position to increase its offer of 21 st October." The company was put into voluntary liquidation six days later. The company claimed that further losses would endanger the jobs of the 1200 people employed elsewhere in the group.

After the liquidator came in efforts to revive the company continued.

An application was made to Foir Teoorant a for facilities of £3.9m. towards the financing of a new company which would take over CPM.

The date for final closure of the plant, December 6, was postponed while negotiations continued.

At Cabinet level CPM was not connsidered a strategic industry and allthough strenuous efforts were made to avoid closure the firm was seen as just another factory in trouble.

The Board of Foir Teoranta, having considered a report on CPM by the Boston Consulting Group, turned down the application on December 5. At this point the Minister for Industry and Energy, Michael O'Leary, brought the management of CPM and the trade unions together to discuss ways of reducing the cost of the rescue packkage by -bringing in redundancies and reaching agreement on pay restraint over the first three years of the prooposed new company's operations. O'Leary also persuaded the IDA to pump money into the company to offset losses over a period of approxximately eight weeks while negotiaations continued. It is believed that IDA funding in this period amountted to around £100,000. (O'Leary also made representations for relief in the January Budget on hydrocarrbon tax - which in 1980 added £280,000 to production costs at CPM. The move, which would cost £lOm. was rejected by John Bruton.)

In the course of the negotiations the unions made considerable conncessions. There would be 157 redunndancies, reducing the workforce to 301, a wage freeze until May 1982, an agreement on wage restraint until 1984 which would take £150,000 from the projected wage bill, and commitments on a new house agreeement.

The unions also agreed to shortttime working during 1982 which would entail a saving to the new commpany of £650,000 on projected wage costs.

By the second week of January 1982 the parties involved had worked out a new application to Foir Teorranta which would cost £1.424m., a reeduction of £2.476m., on the original application for state aid.

For this £1.424m., Foir Teoranta would take 45% of the equity in the new company and CPM would do the same. (Any party taking over 50% of equity would be liable for redundancy payments etc.) The remaining 10% was to be taken up by a third party. Smurfits were involved for a time but lost interest. It was agreed that the workers themselves would if necessary purchase the 10% at a cost of £216,000.

The sticking point in the negotiaations was a new bonus scheme which CPM had derived. Previously workers had received a bonus payment based on the amount of paper produced @the new scheme was calculated on the amount of paper that was saleable, with no bonus paid for faulty paper. CPM claimed that this would reduce costs by about £500,000 a year, a figure which at least two of the other parties involved treated with some scepticism. There was also failure to agree on a method of resolving dissputes about the scheme. The unions proposed that the old bonus scheme should operate for the first three months of the new company while discussions continued.

However, Foir Teoranta calculations on the finances of the new company included the figures given by manageement on the new bonus scheme and they made acceptance of the scheme a condition of their involvement. The negotiations collapsed. The company closed down on January 22, after several extensions of the closing date.

Even before the fall of the Coaliition government on January 27 there had been involvement by the politicians in the affair. The proposal of nationalisation "if necessary" had already been raised by Fianna Fail. The workers readily took up the suggestion. They were intensely susspicious of the Clondalkin Group manaagement and believed that the Group

had wanted to get out of the ailing paper manufacturing business and concentrate on its other interests. They alleged that Swiftbrook, a subbsidiary firm in Saggart, was already importing paper and selling it under the CPM label.

On the Monday after the closure the workers' Action Committee had a meeting with local politicians, including Brian Lenihan. Lenihan proomised that Fianna Fail would move to reopen the mill and if necesssary bring in a Private Members Bill to nationalise it. The workers say that Lenihan also promised that a Fianna Fail government would reopen the pulp mill, which had closed a year earlier. Labour's Mervyn Taylor, preesent at the meeting, promised his support in any moves to reopen the mill.

The promise on reopening was repeated by Lenihan at a subsequent public meeting in Clondalkin. During the election campaign, on February 4, the Action Committee secured the signatures of six Fianna Fail canndidates, Mary Harney, Liam Lawlor, Brian Lenihan, Sean Walsh, Eileen Lemass and Richard Conroy, to a pledge that a Fianna Fail government would "as a matter of urgency, take the necessary steps to ensure the reesumption of production at the mill."

At a press conference during the campaign Haughey indicated support for nationalisation if necessary. Des O'Malley, at the same conference, was less confident. Under pressure as to whether he agreed with Lenihan's promises he said yes and no and mayybe.

The Action Committee had lobbied various politicians, including Tony Gregory, and in the manoeuvrings for votes to elect a Taoiseach Gregory reeceived from Charlie Haughey a committment to nationalise the mill if efforts to secure a buyer failed after three months. The Action Committee first got word of this from the newspapers. It seemed to copperfasten the earlier commitments.

The efforts to find an outside purrchaser for the mill came to nooghing, and nobody seemed to seriously expect them to come to anything. On April 15 the new Minister for Industry and Energy, Albert Reynolds met with union representatives and politicians and confirmed next day in writing the substances of the meeting - that efforts were continuing to find a buyer or someone who would invest in a joint venture with the state, and that nationalisation was still an option. For the first time a date for reopening was mentioned. "It is my intention," wrote Reynolds, "to use my best endeavours to have the Mill reopened by 9 June."

The Action Committee carried out industrial action against the Clondallkin Group for a time, Reynolds had made it clear that the new company would not take on the commitments to pension rights and service rights which CPM had. The industrial acction was aimed at achieving some form of compensation from CPM for that loss. The action, which centred around pickets on Clondalkin Group subsidiarries and attempts at blacking materials for the Group, petered out after a few weeks. The Group obtained injuncctions against the workers. In addition, although one of the unions involved, T ASS, had made the action official from the beginning and another, the FWUI, had subsequently made it offiicial, the ITGWU refused to sanction the action and some workers who were approached for sympathetic action had been warned that their jobs were being put at risk - while the ex-CPM workers' jobs had been secured by government promises.

Kinnear Consultants were doing a report on the project for Albert Reyynolds and that report was to introduce an element of confusion. The Action Committee was informed on June 3, six days before the supposed reopenning of the plant, that the reopening would now take place three months hence and that fifty people would be employed working one machine on a single shift. The other two machines would remain shut down.

The Action Committee immediately scented betrayal and said so. All of a sudden the loopholes in the promises seemed to grow. The six TDs had merely pledged "resumption of prooduction at the mill." Albert Reynolds had merely promised to use his "best endeavours to have the mill reopened by 9 June." The Commitment given to Tony Gregory was merely to buy the mill if an outside purchaser could . not be found, and there was no commmitment on levels of employment or production.

There was a suggestion that Haugghey was annoyed at a report that some Clondalkin workers had canvassed for Workers' Party candidates in the Dubblin West by-election, but when Haugghey had been approached during the campaign he had been reassuring about the reopening. "You can take it from me."

The workers began a survey of forrmer customers of the mill, asking that commitments be given that orders would be placed with the new commpany. They claimed a positive ressponse and also claimed that up to June 16 they were corning across former customers who had not been contacted by Kinnear. How then, they asked, could Kinnear claim that the market had been properly assessed and found wanting? How could Kinnnear claim that the closure of CPM had caused "not a ripple in the marrket"?

Representatives of the Action Commmittee arrived for a meeting with Hauughey on Thursday June 24 equipped with facts and figures which they believed disproved the conclusions of the Kinnear report. In the event, Haugghey cut them short and dismissed the Kinnear figure of 50 workers as unreallistic. Negotiations for government purrchase of the mill were in progress with the liquidator. Albert' Reynolds was setting up a meeting with union reppresentatives to discuss terms of emmployment and staffing levels. He had been in touch with people who knew the industry and they told him that 50 was a silly figure. The Action Committtee were reassured, but are aware that they still only have Haughey's word to go on, with no figures, dates or stafffing levels agreed in writing.

It is likely that the reopening of Clondalkin Paper Mills will be on a phased basis. Thinking at Cabinet level is that two of the three machines will eventually go back into production, with staff levels around the 220 mark. Kinnear were employed primarily to assess a management team which would run the new company on a contract basis. Smurfits were again considered for this role, but it is more likely that a team from Henry Cook, an English firm in the paper industry, will get the job.

A new valuation of the property has been carried out. At the time of the F oir Teoranta in terest the figure for purchase of the firm was approachhing £2.9m. This was cut to about £2.5m. by a decision that office builddings near the plant were a dispensable part of the package. Foir Teoranta also argued with the company's figures for the purchase of spare parts and it is likely that the figure could be cut by at least another half million pounds.

There is still a fear among those occupying the plant that the moves will be aimed primarily at getting Haughey out of the corner into which he painted himself with promises. A management team from another commpany in the paper industry, whether English or Irish, might have a conflict of interests, and a team, perhaps conntaining elements of the old .rnanageement team at CPM, would be preferrable as it would have the single interest of keeping the company going.

There is still an air of confidence among the workers. So far their occuupation of the plant has been little more than providing a free security service. However, should they connclude that the reopening is a temporrary one, with failure and a further closure preprogrammed, they are unnlikely to merely walk away from the plant. They have nowhere else to go.